HP To Buy Palm For $5.70/Shr; Does Street Expect Other Bids? (Updated)

By Eric Savitz

Hewlett-Packard(HPQ)announced a few minutes ago a deal to acquire Palm(PALM) for $1.2 billion or $5.70 a share in cash. The purchase price includes the assumption of Palm’s debt.

The move is clearly designed to jump-start HP’s barely existent position in the smart phone market. Despite all of the speculation about other buyers – HTC, say, or Lenovo – Palm has fallen into the hands of what was probably the most logical buyer in the first place. The question now: can HP use its heft to turn Palm’s primary asset – the WebOS software – into the kind of success that proved elusive to Palm as a stand-alone company.

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There are 11 comments

APRIL 28, 2010 4:28 P.M.

Anonymous wrote:

But how are Elevation Partner's Preferred shares going to interfere with this deal as far as REAL common shareholders are concerned?

I thin kthe full story is yet to be told.

APRIL 28, 2010 4:50 P.M.

Anonymous wrote:

No, that's just short covering - it's settling out now as new shorts take position sinc ethe arbitrage price will be below $5.70.

APRIL 28, 2010 4:51 P.M.

Anonymous wrote:

Palm has made a small filing showing an expected massive miss for the quarter:

>>> "...The Company expects revenues for its fourth fiscal quarter to be in the
>>> range of approximately $90 million to $100 million on a GAAP ( 1) and a
>>> non-GAAP basis...Palm also expects to close its fourth fiscal quarter with a cash, cash
>>> equivalents and short-term investments balance between $350 million and
>>> $400 million..."

They still have to say how the Preferred shares are going to be handled.

APRIL 28, 2010 5:02 P.M.

Anonymous wrote:

WebOS is great and, well, the hardware can only get better, as will the marketing effort. But will HP get shelf space in the phone markets? I'd always given HP credit for being smarter than this; valuation is a bit high.

Are the Preferred shares still preferred - meaning they get theirs FIRST?

I think some "journalists" need to start finding out the truth behind this deal.

APRIL 28, 2010 5:45 P.M.

ElevationGetsTheirs wrote:

No way Elevation Partners give up anything. That is not how VC works. If anything, they are the ones actively talking to people and pulling on connections to get the deal sealed. HP will assume debt so that could mean many things and it may also include a deal with Elevation Partners to make the deal palatable to HP as well as profitable to Elevation.

I expected Dell to act on this but it is good HP took it. HP can use Palm and will hopefully give Palm products a chance to shine. The more competition, the better.

The only concern now is how many Palm people will stick around to do the work. How many will leave to pursue other opportunities. Are those left able to craft WebOS to the next level making it comparable to iPhone OS and Android? Those are important questions.

It is a good day for those Palm employees who are wanted by HP. Others not wanted by HP will likely be snatched up by Dell, Nokia, Google and may be even Apple.

APRIL 28, 2010 5:51 P.M.

FantasticNews wrote:

This is just fantastic news for HP, not sure about Palm employees.

HP now can get a hold of Palm's patents and technologies and hopefully a few good engineers. HP can now enter the "iPad" and mobile market swiftly within 12 to 18 months assuming integration works smoothly.

This also proves that having your own OS is paramount. Using Windows 7 or Android just puts HP in a laggard position. Now HP can innovate and compete on near-equal footing against Nokia, RIMM, Apple, Google and Microsoft.

This is fantastic, fantastic news. I hope Palm employees are taken care of in this purchase.

APRIL 28, 2010 6:22 P.M.

Anonymous wrote:

Well...either the total deal price has to actually be WAY above the $1.2 billion HPQ said it was or the price per share has to go WAY below what HPQ said it was.

One or the other.

Because there is no way Elevation Partners said okay to swallowing $100 million for no particularly good reason.

APRIL 28, 2010 10:50 P.M.

stts wrote:

Yea this is a done deal. Everybody already knows about all the skeletons, and they do have an outstanding product that needs financial muscle to back it up. I just cant believe this didnt turn into a bidding war. GOOG, MOT MSFT, HTC NOKIA, theu are all in big trouble now. This is THE Iphone amd Ipad battle ax. Its going to be the big battle of HP/PALM and Apple. This is huge, this is monster big. And PALMs development team isnt going anywhere. They are on the ground floor building the jugernaught that puts the pain to Apple. Now that Rubenstein is no longer calling the business shots, PALM may finally blossum and realise the potential that his team created. They say he's a great engineer, but he's a cluttz as a CEO. Debacle after debacle. Rein that guy in to use his strenghts or kick the dude out. And move aside folks, as Hp/Palm is comming through like a freight train. :)

Oh, a bidding war could still errupt, if any of those other idiots ever wake up to the deep smartphone mess they are currently burried in. To double their price, PALM would gladly pay the busted deal clause.

APRIL 28, 2010 10:55 P.M.

stts wrote:

You know, Im taking a long position in PALM. It aint going down. Its either dead money, or bidding war rumors jack up the price. Sounds cool to me. :)

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